Many seem to conclude it would be easy to be rich or wealthy if they earned more. Others may judge their wealth based on the amount of savings they have in their bank account. True wealth comes in the form of correct management of a few different areas.
Earning an Income
There are two ways to earn money – via a direct income and from a passive income. A direct income happens when you work and get paid for it. A passive income involves working once and getting paid many times.
For those who seek wealth; finding ways to generate a passive income would be worth looking into. This may involve investing in a property that provides a consistent rent return or writing articles that have the potential to earn regularly. The key to not having to continually work to earn an income comes from investing in passive methods early in life. However, it’s never too late to start!
Money makes the world go round, or at least, the economy. It is said to be better to give to receive. And how wonderful for the person who is in a position to give and give frequently!
When one adopts and continually practices wise financial principles, giving should become second nature. There may be times when it ‘hurts’ to give but it often is worth doing anyway. When the pocket starts to get a bit tight, don’t revoke the $40 or so a month that is being invested in a supporting a child in a third world country. Instead, assess the budget and consider removing a ‘want’ from the weekly spending need. This may include the daily coffee; take out dinner on a Friday night or the movie that is budgeted for each week.
Spending on a Budget
A budget involves telling the money that you’ve earned where it’s going to go – rather than wondering where it went! Making use of a budget means that every dollar or cent is accounted for and it’s possible to see where adjustments can be made if the desire for a new gadget, a deposit for a house or even funds for a birthday present need to be saved up.
To make the most of one’s budget, the net income should be listed; all expenses and areas for giving and saving should also be budgeted. In this way, a little money should always be able to be put aside for the next item on a wish list or for unexpected expenses.
Saving is an excellent habit to start as soon as money is being earned – not as soon as you deem it possible. If money isn’t put away for savings, it’s often considered not possible and therefore will never happen.
Consider the 1/10 rule of the Richest Man in Babylon: a tenth of all you earn is yours to keep. Start practicing this rule today. Each time a pay check comes through, you get given a bonus or holiday pay or money is deposited into your account for works carried out, transfer one tenth of this into a separate savings account.
Ten is a valuable number. You may be amazed at how quickly savings can start to accumulate over a matter of months of persistently following this rule. And don’t forget to put those savings to work! Let your savings earn interest for you in a savings account.
Being wise with money is a skill that children must learn from an early age in the home. Be responsible with your finances and then teach your children to do the same. Teach them the value in: